Correlation Between Capital One and First Guaranty
Can any of the company-specific risk be diversified away by investing in both Capital One and First Guaranty at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Capital One and First Guaranty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital One Financial and First Guaranty Bancshares, you can compare the effects of market volatilities on Capital One and First Guaranty and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Capital One with a short position of First Guaranty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and First Guaranty.
Diversification Opportunities for Capital One and First Guaranty
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capital and First is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and First Guaranty Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Guaranty Bancshares and Capital One is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Capital One Financial are associated (or correlated) with First Guaranty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Guaranty Bancshares has no effect on the direction of Capital One i.e., Capital One and First Guaranty go up and down completely randomly.
Pair Corralation between Capital One and First Guaranty
Assuming the 90 days trading horizon Capital One Financial is expected to generate 0.49 times more return on investment than First Guaranty. However, Capital One Financial is 2.02 times less risky than First Guaranty. It trades about 0.04 of its potential returns per unit of risk. First Guaranty Bancshares is currently generating about 0.01 per unit of risk. If you would invest 1,660 in Capital One Financial on August 30, 2024 and sell it today you would earn a total of 387.00 from holding Capital One Financial or generate 23.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital One Financial vs. First Guaranty Bancshares
Performance |
| Timeline |
| Capital One Financial |
| First Guaranty Bancshares |
Capital One and First Guaranty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and First Guaranty
The main advantage of trading using opposite Capital One and First Guaranty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, First Guaranty can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in First Guaranty will offset losses from the drop in First Guaranty's long position.| Capital One vs. Capital One Financial | Capital One vs. Citizens Financial Group | Capital One vs. Wells Fargo | Capital One vs. Equitable Holdings |
| First Guaranty vs. Capital One Financial | First Guaranty vs. Capital One Financial | First Guaranty vs. Bank of America | First Guaranty vs. KeyCorp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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